Appeal to Appellate Tribunal – Rectification of mistakes: – (a) Power of Tribunal to rectify mistake – Error must be apparent from record – Tribunal allowing rectification application filed by Department on sole ground of contradiction in its earlier orders and assessee had not filed rectification petition in subsequent case – No error apparent on face of record – Tribunal wrongly allowed rectification application filed by Department; (b) Levy of penalty u/s 271(1)(c)(i)(a) – Failure by Tribunal to consider applicability of Explanation to section 271(1) to cases u/s 271(1)(c)(i)(b) – Not ground for rectification

Appeal to Appellate Tribunal – Rectification of mistakes: – (a) Power of Tribunal to rectify mistake – Error must be apparent from record – Tribunal allowing rectification application filed by Department on sole ground of contradiction in its earlier orders and assessee had not filed rectification petition in subsequent case – No error apparent on face of record – Tribunal wrongly allowed rectification application filed by Department; (b) Levy of penalty u/s 271(1)(c)(i)(a) – Failure by Tribunal to consider applicability of Explanation to section 271(1) to cases u/s 271(1)(c)(i)(b) – Not ground for rectification

For the A.Y. 1982-83, there was a delay in filing the return of income by the assessee. The A.O. rejected the explanation offered by the assessee for the delay and imposed a penalty u/s 271(1)(a).

The Commissioner (Appeals) partly allowed the assessee’s appeal on the ground that there was a delay of only five months in filing the return which was properly explained and directed the A.O. to determine the quantum of penalty in the light of the directions given by the Tribunal in Ramlal Chiranjilal vs. ITO [1992] 107 Taxation 1 (Trib). The Tribunal confirmed the order of the Commissioner (Appeals).

The Department filed an application for rectification u/s 254(2) contending that the decision in Ramlal Chiranjilal’s case was not applicable and the direction to follow that decision was incorrect and that the Tribunal in the case relating to a sister concern of the assessee decided not to follow that decision. On this basis, the Tribunal allowed the application for rectification.

On a reference by the assessee, the Kerala High Court held as under:

‘i) A mistake which can be rectified u/s 254(2) is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. An error of judgment is not the same as a mistake apparent from the record and cannot be rectified by the Tribunal u/s 254(2).

ii) Conclusions in a judgment may be inappropriate or erroneous. Such inappropriate or erroneous conclusions per se do not constitute mistakes apparent from the record. However, non-consideration of a binding decision of the jurisdictional High Court or Supreme Court can be said to be a mistake apparent from the record.

iii) The different view taken by the very same Tribunal in another case, on a later date, can be relied on by either of the parties while challenging the earlier decision or the subsequent decision in an appeal or revisional forum, but cannot be a ground for rectification of the order passed by the Tribunal. It can at the most be a change in opinion based upon the facts in the subsequent case. The subsequent wisdom may render the earlier decision incorrect, but not so as to render the subsequent decision a mistake apparent from the record calling for rectification u/s 254.

iv) The Tribunal was wrong in allowing the rectification application filed by the Department on the basis of a decision rendered subsequent to the order that was sought to be rectified. The reasoning of the Tribunal was erroneous. A decision taken subsequently in another case was not part of the record of the case. A subsequent decision, subsequent change of law, or subsequent wisdom that dawned upon the Tribunal were not matters that would come within the scope of ‘mistake apparent from the record’ before the Tribunal. The Tribunal had not found that there was any mistake in the earlier order apparent from the record warranting a rectification. The only reason mentioned was that there was a contradiction in the orders passed and no rectification application had been filed by the assessee in the subsequent case. The satisfaction of the Tribunal about the existence of a mistake apparent on the record was absent.

v) The Department’s further contention was for the proposition that the reason for filing the rectification application was on account of the omission of the Tribunal to consider the Explanation to section 271(1) (as it then stood). Even though the order of rectification issued by the Tribunal did not refer to any such contention having been raised, such contention had no basis. Penalty was levied u/s 271(1)(c)(i)(a) (as it then stood), while the Explanation applied to the cases covered by section 271(1)(c)(i)(b) (as it then stood). In such view also the rectification application filed by the Department could not have been allowed by the Tribunal.’